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Fuel taxes up again to pay for RoNS

By Matt L, on July 1st, 2014

Today the price of fuel goes up once again due to an increase in fuel taxes to pay for the governments Roads of National Significance programme. It’s part of an annual hike of 3 cents per litre per year over a three year period that was announced in December 2012. Here’s the story from 2012 as a reminder:

The Government will increase petrol tax by three cents a litre each July 1 for the next three years.

Transport Minister Gerry Brownlee said road user charges would also be increased by an equivalent amount.

He said the increases were required to deliver the “Roads of National Significance” programme and other roading projects to the timeline set out in the Government’s land transport funding policy.

“Excise increases in recent years have helped maintain the real value of the Land Transport Fund. These latest increases will also achieve that, and allow for continuing investment in the Government’s state highway building programme and other transport projects,” Brownlee said.

The increase sees prices once again nudge closer to their all-time record high of 226.9 cents which was set in July last year.

The change in both the fuel taxes and importer margin appear to have been having quite a bit of impact over the last six or so years. The importer margin has almost doubled over that time to around 30 cents per litre while the amount paid on fuel taxes has increased by over 10 cents per litre.

Yet this increase isn’t enough to pay for all of the governments roading binge. The Auckland package of motorway projects is being funded in part by a $375 million interest free loan while the $212 million rural roads package announced on the weekend is being paid for by asset sales.

By contrast next week prices are going down for public transport in Auckland if you use HOP. Perhaps something AT should highlight strongly.

37 comments to Fuel taxes up again to pay for RoNS

Good to see fuel taxes going up, even if the reason is wrong. And it’s not quite correct that public transport fares are going down if you use HOP. In the case of fullers ferries they’re actually going up.

Fullers is a fully commercial service, its gets no subsidies from AT, so Fullers can and do charge what they think the market will bear and AT can’t stop them doing that.
Suggest you take up your price hike gripe with them directly not AT.

The good news is that continued high prices will see further uptake of newer and more efficient vehicles, abandonment of older and less efficient (and unsafer) vehicles, decreased pollution, decreased vehicle kilometres, decreased speeds, decreased injury and death.

The only pity is that the Government is implementing these measures in an attempt to do the opposite.

That’s probably an understatement. If people drive the same kilometres every year, but shift from a vehicle consuming 10l/100km to a vehicle consuming 7l/100km, then the amount of tax gathered has dropped by a third. The 3c per year increases are probably only just keeping pace with decreases in fuel use, and may not even cover that. This will put even more pressure on drivers to use more efficient vehicles and drive shorter distances, and NZTA to adopt rationality.

George that’s great in theory but it isn’t what’s happening. People have been responding to improvements in engine efficiency by buying bigger vehicles. You may have seen these around. The result is the overall efficiency of the nation’s fleet is not improving. Luckily we are, on average, driving less however.

Engine size growth has tailed off (10.2), partly because of an aging fleet which is more reliable, and partly because larger engined cars stay on the road for longer. But it isn’t yet declining. What’s driving the decrease is decreases in kilometres travelled.

All very well saying it is good but in the Rural and Provincial areas of NZ public transport is none existent. Already those areas pay a premium on fuel for deliveries and yet its another nail in the coffin of many small towns struggling. You say by more efficient cars and newer ones! Where are these coming from? That is right overseas markets not built in NZ and where is the money coming from for the average motorist to be able to buy a new more efficient car especially in those towns the fuel prices are hurting. If money is being spent on roads I had not noticed it through the pothole that keeps appearing along a section highway I live. Then again that pothole is where the money is going patching it up. If it improves public transport all over NZ then yes in favour but it will not will it!

Colin, I think you misconstrued the argument we’re making. The government is having to raid its asset sale fund to pay for these new bridges, because its spent all the fuel tax money on its motorway projects. Not enough money to pay for maintenance of rural roads? Same problem. Some of the announced projects may be meritorious. Some of them may not be. But they are exactly the type of projects that fuel taxes should be paying for. The government can only sell off the power companies once, but there will be always be another roading project.

Yes, I agree with Chris. And it is also important to keep in mind that the motivation for the upgrading of bridges is the new super trucks, not the regional public. Which will have a very damaging affect on the roads, and ultimately cost many more millions in maintenance.

Colin, you will see from the original announcement from the minister that the money raised is not going to local roads, it is specifically for duplication of existing highways that for some ‘strategic’ reason the government believes are required. Some of these projects make financial sense (generally those already built), most don’t.

The downside to this is your pothole- local highways throughout the country are having less spent on them while these massive and unnecessary projects are pushed forward.

Colin B, you are correct in saying that rural NZ pays more to get a piece of furniture delivered than in the city but for the majority of consumer goods retailers in NZ run national pricing meaning you will pay the same for a case of Steinlager in Haast as you will in Ponsonby at the same retailer. Sure Haast doesn’t have a Pak’nSave (and neither does Ponsonby, thankfully) but that’s the rationale for any price difference. The subsidy actually goes the other way, the city dweller is subsidising freight to the regions in many cases. It is the agglomeration effects of larger centers that creates competition and pushes city prices down not the freight costs to the regions that pushes prices up, especially when the grocers and others use fuel discounts as a means of attracting custom.

I’m not really directing my gripe at AT – Fullers have long been resistant to playing the game when it comes to HOP. I thought they did get a subsidy, although not for the Devonport route. Although it doesn’t really matter what routes the subsidy relates to – it’s just money into the pot.

Best way to avoid this is to right-click and open the reply-panel in a new tab or a new window, and check that it states “Leave a reply to Greg N” (or whoever you are replying to). Do this and there is a reasonable guarantee that the reply will end up where you want it.
If you simply left-click “reply”, a reply-panel will open up without stating who it is replying to (or may even have the wrong name), and it is in the lap of the gods where your reply will end up.

Couple of you misunderstood me my reference MR plod was not to delivery costs but the delivery costs imposed on fuel deliveries resulting in high pump prices in rural areas. I also am painfully aware of the governments reduction of funding to district councils to maintain non highways and putting the burden on local ratepayers. I live in one such district where due to the altitude and large number of frosts we do have high per km costs for population of the district. Heavier winter traffic flows to the ski areas in the central north island putting even more burden in road wear! From a recent press release Raupehu region has the highest cost per populated km in the country and mostly unsealed roading. How gets to pay that? Well already answered that and local MP is supposed to be fighting that on our behalf. Yes that district is dying fast for many reasons the fact that the funding for roading is being cut to fund new roading in other areas will just restrict more access damaging the local economy and the tourism that is is now heavily reliant on. There is so much to this beyond the scope most can see in the citys or their own perceptions including mine.

I really wish some competent and insightful journalist would take hold of this RoNS debacle, pick it apart, and reveal in laymen’s English, the true extent of the scam being perpetrated on a gullible NZ public. Hammer the story and its disingenuities for all it is worth, until even the most die-hard National Party supporter is in no doubt that this is a confidence-trick of epic proportions. The supposed “economic gain” touted to justify this massive cost DOES NOT EXIST. There is no business-case to support what is happening, no pot of gold under the RoN$BOW. $ Billions of precious resources are about to be totally mis-spent, and the investigative media is largely asleep at the wheel. WAKE UP NZ! FOR GOODNESS SAKE!

“investigative media”? I wasnt aware such a thing existed in NZ. I remember it in Britain and it was great.

The closest we have is maybe Campbell Live and they dont do a bad job. But I imagine that TV3’s links to the National Party and a general unwillingness to annoy the government in such a small country mean they are held on a tight leash.

Wow: “41 per cent said they used their car less than they did a year ago.”

Quick build more m’ways while there’s still some funds in the NLTF, oh wait……

Gas station satisfaction
79% go to a particular service station because of discount schemes or price promotions
41% use their car less than a year ago
19% use more public transport than a year ago
64% said price was more important that convenience when looking to refuel
25% considering buying a different car or switching to a motorbike or scooter to save on petrol
Source: 2014 Canstar Blue Service Stations Consumer Satisfaction Survey